Wellington City Quarterly economic monitor - December 2018

Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
2.2%
2.3%
2.7%
Traffic flow
1.9%
3.1%
2.7%
Health Enrolments
1.4%
1.6%
1.9%
Consumer spending
2.2%
4.2%
4.5%
Residential consents
21%
19%
6.1%
Non-residential consents
-1.3%
-13%
9.0%
House prices*
7.9%
9.8%
2.3%
House sales
0.9%
-1.7%
3.1%
Guest nights
1.1%
1.9%
2.3%
Tourism expenditure
3.7%
4.6%
4.3%
Car registrations
-7.1%
-4.4%
-6.7%
Commercial vehicle registrations
17%
8.8%
1.6%
Jobseeker Support recipients
4.1%
4.4%
4.8%
Level
Unemployment rate
4.3%
4.6%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

Wellington City’s economy grew 2.2%pa in the 12 months to December according to our latest provisional estimates. This growth was on par with the Wellington region average, and slightly below the 2.7%pa New Zealand average. We expect sustained growth in government spending will continue to support growth in the area over the next two years.

Consumer spending increased 2.2%pa over the 12 months to December 2018, continuing its deceleration that started in 2017. However, consumer confidence at the end of 2018 showed increased optimism for the local economy over the next year. Health enrolments, our new leading indicator for population growth, showed 1.4%pa growth in Wellington City over the period.

The labour market in Wellington City remains tight, with the unemployment rate over the period estimated to be at 4.3%pa, the same as the New Zealand rate. Continued employment growth in the public service, creatives, and information technology sectors will keep unemployment low over the next couple of years. However, Jobseeker numbers in Wellington City have increased 4.1%pa, a trend in line with New Zealand as a whole.

Wellington’s building and housing markets remain in growth mode, with residential consents growing by 21%pa in the 12 months to December 2018. Over the period, 1,045 new residential dwellings were consented. However, capacity constraints restricted further growth in non-residential consent values, which fell 1.3%pa over the period.

House prices continue to rise further, up 7.9%pa – still faster than the New Zealand average of 2.3%pa, but slower than the 24%pa peak growth seen in mid-2016. House sales grew slightly, up 0.9%pa, even as the wider Wellington region saw sales fall 1.7%pa. The stock of properties for sale remains low, with total stocks reported by realestate.co.nz down 5.3%pa over the period.

Guest nights rose 1.1%pa during 2018 in Wellington City, while tourism spending lifted 3.7%pa – both slightly below the New Zealand average.

Overview of national economy

Throughout 2018, business confidence indicators suggested the New Zealand economy was going to crash and burn. But although growth slowed slightly, there were no other signs we were staring down the barrel of a full- blown recession. Looking to 2019, New Zealand’s domestic economy remains in a similar position to 12 months ago: prospects of middling growth, somewhat hampered by capacity constraints and a tight labour market, and with some of the biggest potential shifts being driven by government policies (such as migration or the housing market). In contrast to this largely unchanged domestic picture, many question marks have appeared during the last year over the international economic environment.